Demand based pricing, Marketing Management

Assignment Help:

Demand Based Pricing: Described methods belong to the category of demand / market based pricing:-

1. What the Traffic can Bear' Pricing

2. Skimming Pricing

3. Penetration Pricing

  • What the Traffic can Bear' Pricing: The seller takes the maximum price that the customers are eager to pay for the product under the given circumstances. This technique is used more by retail traders and than by manufacturing firms. This method brings big profits in the short term objective. But in the long run it is not a safe concept; chances of errors in judgment are very high.
  • Skimming Pricing:This method aims at high profits & high price in the early stage of marketing the product. It gainfully taps the opportunity for selling at high prices to those segments of the market, which do not bother much regarding the price. This particular method is very useful in the pricing of new products, especially those that have a luxury or specialty elements.
  • Penetration Pricing: Penetration pricing seeks to gain greater market penetration throughout relatively low price. This method is also helpful in pricing of new products under definite circumstances. For instance :when the new product is capable of bringing in large volume of sales, but it is not a luxury item and there is no affluent / price insensitive segment, the firm can select the penetration pricing and make large size sales at a reasonable price before competitors enter the market having a similar product. Penetration pricing in such type of cases will help the firm have a good coverage of the market and keep competition out for some time.

The price elasticity of demand is taken into account in all of the demand based pricing methods, indirectly or directly. Price elasticity of demand refers to the relative sensitivity of demand for a product to changes in its value in other words how significantly the sales of the product are affected when price is changed. If decrease or increase in the price of the product results in significant increase or decrease the product is said to be price elastic conversely, if price change does not considerably affect the sales volume, a product is called to be price inelastic.


Related Discussions:- Demand based pricing

Implementation and control program - marketing budget, On the basis of your...

On the basis of your analysis of the marketing system discuss likely future developments and the opportunities and threats for existing market players and potential new entrants. I

Strategic and distinct comprtitors.., 2types of competitors strategic and d...

2types of competitors strategic and distinct competitors and also identify you strategic competitor and also identify strength and weaknesses of strategic competitor.

What is the drawback of selling concept, What is the drawback of selling co...

What is the drawback of selling concept? Selling Concept : Drawback: Selling relies onto buyer’s manipulation. All the buyers can’t be manipulated and a buyer can’t be ma

What is technological environment technology, What is Technological Environ...

What is Technological Environment Technology? Technological Environment Technology: The knowledge of how to achieve tasks and objectives. Forces, those create new technolo

Explain about the tangible goods, Explain about the Tangible Goods   ...

Explain about the Tangible Goods   Most goods, whether these are industrial goods or consumer goods and whether these are durable or non-durable, fall in this category as the

Concept of the integrated communication mix, Question: (a) Describe and...

Question: (a) Describe and illustrate with clear examples the concept of the ‘Integrated Communication Mix' (b) Using the AIDA model, explain how both Public Relations and

Define marketing mix according to philip kotler, Define marketing mix accor...

Define marketing mix according to Philip Kotler According to Philip Kotler "Marketing Mix is set of controllable variables that firm can use to influence buyer's response".  C

Effectiveness of marketing methods, 1.  How important do you feel the follo...

1.  How important do you feel the following attributes are for a bakery 1: Very Important       5: Not important at all Variety of Products                1 2 3 4 5

Selling in marketing, Explain about the selling in the function of the mark...

Explain about the selling in the function of the marketing. Selling in marketing: This is a significant aspect of marketing under that ownership of goods is transferred b

What do you mean by business to business in e-commerce, What do you mean by...

What do you mean by Business to Business in e-commerce? B2B stands for Business to Business , it is the type of e-commerce. This is a mode of conducting business among two

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd